China’s Biodiesel Producers Seek Brand-new Outlets As Hefty EU Tariffs Bite

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) – Chinese biodiesel manufacturers are seeking brand-new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and analysts stated.

The EU will impose provisional anti-dumping duties of in between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 business including leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export company that deserved $2.3 billion last year.

Some bigger manufacturers are considering the marine fuel market in China and Singapore, the world’s top marine fuel center, as they seek to balance out currently falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have actually fallen sharply given that mid-2023 amid investigations. Volumes in the very first six months of this year plunged 51% from a year earlier to 567,440 heaps, Chinese custom-mades data .

June shipments diminished to just over 50,000 heaps, the most affordable since mid-2019, according to customizeds information.

At their peak, exports to the EU reached a record 1.8 million heaps in 2023, representing 90% of all Chinese biodiesel exports that year. The Netherlands was the leading importer in 2023, soaking in 84% of China’s biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese customizeds figures revealed.

Chinese manufacturers of biodiesel have enjoyed fat profits in recent years, maximizing the EU’s green energy policy that approves subsidies to companies that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

A number of China’s biodiesel producers are privately-run little plants employing ratings of employees processing waste oil gathered from millions of Chinese restaurants. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather items.

However, the boom was short-term. The EU started in August in 2015 examining Indonesian biodiesel that was presumed of preventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced artificially low and undercutting local producers.

Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), raising costs of the feedstock, while rates of biodiesel sank in view of diminishing need for the Chinese supply.

“With hefty rates of UCO partly supported by strong U.S. and European demand, and free-falling item rates, companies are having a difficult time enduring,” stated Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a primary type of biodiesel, have actually halved versus last year’s average to the current $1,200 to $1,300 per metric heap and are off a peak of $3,000 in 2022, Shan included.

With low costs, biodiesel plants have actually cut their operations to a lowest level of under 20% of existing capacity typically in July, down from a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.

Meanwhile, diminishing biodiesel sales are improving China’s UCO exports, which experts anticipate are set to touch a brand-new high this year. UCO exports soared by two-thirds year-on-year in the first half of 2024 to 1.41 million heaps, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While lots of smaller plants are most likely to shutter production indefinitely, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets including the marine fuel market in the house and in the essential center of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.

Among the manufacturers, Longyan Zhuoyue, agreed in January with COSCO Shipping to use more biodiesel in marine fuel.

Companies would likewise accelerate preparation and structure of sustainable air travel fuel (SAF) plants, executives said. China is expected to announce an SAF mandate before the end of 2024.

They have actually also been scouting for new biodiesel clients outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional requireds for the alternative fuel, the officials added.

(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)